The “As-Is” Clause Illusion: Why You’re Still on the Hook After a Sale

Business owners and landlords often rely on the “as-is” clause to avoid future liability. It’s one of the most common provisions in real estate and asset sales. On paper, it looks simple: the buyer takes the property or goods in their current condition, with no warranties. But here’s the illusion—“as-is” doesn’t always mean you’re free from responsibility.

What an “As-Is” Clause Does

An “as-is” clause says the buyer accepts the item, property, or service in its current condition. The seller disclaims warranties about quality, fitness, or future performance. It shifts risk of defects to the buyer. Sounds airtight, right? Not exactly.

The Limits of “As-Is”

• Fraud and Misrepresentation: Sellers can’t lie or conceal material defects. An “as-is” clause won’t protect fraud.
• Active Concealment: Covering up problems—like painting over water damage—invalidates “as-is.”
• Statutory Protections: Many state and federal laws (consumer protection, disclosure laws) override blanket disclaimers.
• Latent Defects: Hidden dangers not discoverable on inspection can still lead to claims.

A Question I Hear All the Time

Clients often ask me: “If I put ‘as-is’ in my contract, I’m safe, right?” My answer: not if you’re hiding something. Courts in New York and New Jersey consistently hold that “as-is” doesn’t excuse fraud, concealment, or statutory duties. It’s a shield, but a limited one.

How Buyers Should Respond

• Inspect Thoroughly: Don’t rely on contract language—document the condition yourself.
• Demand Disclosures: Ask the seller to certify no known material defects are being withheld.
• Negotiate Warranties: Even limited warranties can provide protection against major defects.

How Sellers Should Protect Themselves

• Disclose Honestly: Full disclosure limits liability and undercuts fraud claims.
• Keep Records: Document what was disclosed and inspected.
• Pair With Integration Clauses: Ensure the contract says it contains the entire agreement, limiting “he said, she said” disputes.

Don’t Be Fooled by “As-Is”

At JDE Law Firm, PLLC, I’ve litigated many cases where “as-is” clauses gave sellers false confidence. If you’re drafting, signing, or disputing an “as-is” contract, make sure you know the real limits before it’s too late.

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